An Act to amend the Liquor Control Act and the Liquor Licence Act with respect to the sale of spirits

Her Majesty, by and with the advice and consent of the Legislative Assembly of the Province of Ontario, enacts as follows:

Liquor Control Act

1. Section 3 of the Liquor Control Act is amended by adding the following subsection:

Increase in retail stores for spirits

(2.1) The Board shall ensure that the number of government stores that it authorizes persons to operate under clause (1) (e.1) for the sale of spirits distilled in Canada to the public as of the fifth anniversary of the day on which this subsection comes into force exceeds by at least 20 per cent the number of such stores as of the day on which this subsection comes into force.

2. The Act is amended by adding the following section:

Mark-up on sale of spirits

3.0.0.1 (1) Despite anything in subsection 3 (1) or (1.1) or the regulations made under this Act, the mark-up on the sale price of spirits that a manufacturer produces and sells to the Board in a year for resale at a government store under clause 3 (1) (d) or (e.1) shall not exceed,

(a) 10 per cent, for the first 50,000 litres of the manufacturer’s spirits sold in the year to the Board;

(b) 20 per cent, for that part of the manufacturer’s spirits sold in the year to the Board in excess of 50,000 litres up to 100,000 litres; and

(c) 40 per cent, for that part of the manufacturer’s spirits sold in the year to the Board in excess of 100,000 litres up to 625,000 litres.

Sales at manufacturer’s retail store

(2) Despite anything in subsection 3 (1) or (1.1) or the regulations made under this Act, the mark-up on the sale price of spirits that a manufacturer produces and sells in a year at a store that the manufacturer owns or operates and at which it is authorized to sell under clause 3 (1) (e) shall not exceed,

(a) 10 per cent, for the first 50,000 litres of the manufacturer’s spirits sold in the year at the store;

(b) 20 per cent, for that part of the manufacturer’s spirits sold in the year at the store in excess of 50,000 litres up to 100,000 litres; and

(c) 40 per cent, for that part of the manufacturer’s spirits sold in the year at the store in excess of 100,000 litres up to 625,000 litres.

Liquor Licence Act

3. Subsection 5 (4) of the Liquor Licence Act is repealed and the following substituted:

Exception

(4) Subsections (1), (2) and (3) do not apply to the sale or delivery of liquor,

(a) by or under the authority of the Liquor Control Board of Ontario under the Liquor Control Act; or

(b) by a microdistiller as defined in section 22.1 under the authority of section 22.2.

4. The Act is amended by adding the following section:

Manufacturer’s licence to sell spirits onsite

6.0.1 (1) Despite subsection 6 (4), the holder of a manufacturer’s licence to sell spirits to the Liquor Control Board of Ontario may obtain a licence that authorizes a manufacturer to sell spirits in accordance with this section.

Precondition

(2) A licence may be issued under subsection (1) only if the council of the municipality, if any, in which the spirits are to be sold has passed a resolution in support of the issuance of the licence.

Definition

(3) In subsection (4),

“manufacturing site” means property that is used by a manufacturer primarily for the distillation and production of spirits.

Conditions of licence

(4) The following are conditions of a licence issued under this section that the manufacturer must comply with:

1. The licence authorizes the manufacturer to sell only spirits manufactured by the manufacturer.

2. The spirits may be sold only in areas that are under the sole control of the manufacturer and that are located on or immediately adjacent to a manufacturing site of the manufacturer.

3. The sale is primarily aimed at promoting the manufacturer’s product and either providing an enhanced tourist experience or fulfilling an educational purpose.

4. The spirits must be sold in servings that are equal to or less than 43 ml (1.5 oz.).

5. The spirits must be sold and served no earlier than 11 a.m. and no later than 11 p.m. on any day.

Exemptions

(5) Alicence issued under this section shall not have attached to it any other conditions except if the regulations specifically provide that the conditions apply to the licence for the purposes of this subsection.

5. The Act is amended by adding the following sections:

Microdistillers

Microdistiller

22.1 (1) For the purposes of this section and section 22.2, a manufacturer of spirits is a microdistiller for a calendar year if all of the following circumstances exist:

1. The manufacturer holds a licence to sell its spirits to the Liquor Control Board of Ontario under section 22.

2. The manufacturer’s worldwide production of spirits in the production year for that calendar year,

i. was not more than 625,000 litres, or

ii. is expected to be not more than 625,000 litres if that production year is the first production year in which it manufactures spirits.

3. In the production year for that calendar year, the manufacturer was not a party to any agreement or other arrangement pursuant to which any other manufacturer of spirits who is not a microdistiller agreed to manufacture spirits for it.

4. In the production year for that calendar year, the manufacturer was not a party to any agreement or other arrangement pursuant to which it agreed to manufacture spirits for any other manufacturer of spirits who was not a microdistiller. However, the manufacturer may have been a party to an agreement or other arrangement pursuant to which it agreed to manufacture spirits for another manufacturer of spirits who would have been a microdistiller in the calendar year if paragraph 3 did not apply to that other manufacturer of spirits.

5. Every affiliate that the manufacturer had that manufactured spirits in the production year for that calendar year was a microdistiller.

Definition

(2) In subsection (1),

“production year” means, in relation to a calendar year, the 12-month period that ends on the last day of October immediately before the beginning of the calendar year.

Application of Alcohol and Gaming Regulation and Public Protection Act, 1996

(3) Subsections 17 (5) and (6) and 22 (3.1) and (4) of the Alcohol and Gaming Regulation and Public Protection Act, 1996 apply, with necessary modifications, for the purposes of determining whether a manufacturer of spirits is a microdistiller, including reading references in those provisions to beer and microbrewers as references to spirits and microdistillers.

List of microdistillers

(4) The Minister shall compile annually and make available to the public for each calendar year a list containing the names of manufacturers of spirits that are microdistillers for the calendar year and the names of the brands of spirits that they manufacture.

Sale and delivery of spirits

22.2 Subject to any requirements that are prescribed but despite any restriction imposed under any agreement entered into under this or any other Act, a microdistiller may sell and deliver the spirits that it manufactures to a person who holds a licence to sell liquor or a permit issued under this Act.

6. Subsection 62 (1) of the Act is amended by adding the following paragraph:

11.2 prescribing conditions that, for the purposes of subsection 6.0.1 (4), apply to a licence issued under section 6.0.1;

Commencement and Short Title

Commencement

7. This Act comes into force six months after the day it receives Royal Assent.

Short title

8. The short title of this Act is the Free My Rye Act (Liquor Statute Law Amendment), 2016.

EXPLANATORY NOTE

The Bill amends the Liquor Control Act and the Liquor Licence Act.

Liquor Control Act

The Liquor Control Board of Ontario is required to ensure that there is at least a 20 per cent increase in the number of stores for the sale of spirits over the five years after the Bill comes into force.

The Bill sets out a series of graduated maximum amounts for the mark-up on the sale of spirits made by a particular manufacturer in a year to the Board or at the manufacturer’s own retail store. The amounts start with the first 50,000 litres sold in the year and are lower than the mark-up that presently applies.

Liquor Licence Act

Currently, regulations under the Act permit certain manufacturers of beer and Ontario wine to obtain a licence to sell their beer and wine by the glass. The Act is amended to permit manufacturers of spirits to sell their spirits by the glass.

A manufacturer of spirits is a microdistiller if, among other things, it holds a licence to sell liquor to the Liquor Control Board of Ontario and produces no more than 625,000 litres of spirits annually. Microdistillers are permitted to sell and deliver their spirits to persons who hold a licence or permit to sell liquor issued under the Act.